Automotive technology is heading for the electric car revolution

Where the mobile industry was in 2009, the automotive industry is in a similar place today. The electric vehicle revolution is now underway in this industry. This revolution has already passed the ‘iPhone’ phase and is now experiencing its ‘Android’ moment. Many similarities to the early days of the smartphone industry can be found here, if one pays close attention. It is no coincidence that major smartphone companies such as Xiaomi, Huawei, LG and Sony are entering the automotive industry. Analyzing the timing of the smartphone revolution will make it easier to understand the current electric car revolution and its future.

The main trends in electric vehicles are the electrification of vehicles, automated driving and an increasing use of screens and software. Among them, two common features are mainly observed. One is that these trends are fundamentally changing the business of making and selling cars. Another is that these trends have nothing to do with old-fashioned automakers, where their greatest strength lies. That is, these trends are distracting the industry from many of the technologies these companies have developed over the decades.

There are some examples of the industry moving towards electrification. For example: BMW designed their iconic cylindrical motor housing a few years ago to look like a battery. The cars of the future will have many similarities with the cars of the past. The main visible parts of a car are wheels, seats, windshield, etc. But the smartphone’s similarities to previous feature phones were not enough to save industry giants like Nokia and Ericsson from the fall. Even if they’re good at bending metal sheets or designing blinders, there’s no telling whether a company like BMW or Toyota can hold its own against the onslaught of so many new competitors.

Last year, 40 percent of car production costs were spent on electronics. Ten years ago it was 27 percent and in 2000 it was only 18 percent. In terms of cost, it has become an electronic consumer item. In the future, motorists will pay more attention to the internet-connected giant screen in front of them than to the road in front of them. As a result, different types of income will come from this as well. Some companies already offer users the option to upgrade their automated driving software. Again, there is an opportunity to purchase upgrades to various components of the vehicle through software updates in exchange for money. This trend will gradually increase in the future.

The mobile industry was initially also mainly a hardware company. But when it connected to the internet and our wallets, it became a web and software based business through apps and services from different developers. Later, many mobile software companies were also founded.
Automated driving, connectivity with other devices, electrification – these elements mainly affect the fundamental changes in the car. Average car use in America has increased by more than 20 percent since 1980. In cities such as Beijing or Cairo, a large part of people’s daily lives is spent in the car. The car just needs to get out of the vehicle to use this time. The vehicle must be connected to other more essential tasks. This is where the use of software can help.

In the future, a huge software industry will develop around the automotive industry, where consumers will buy them, watch advertisements and even choose cars based on such technology. Both production costs and vehicle revenues will become increasingly integrated with these advanced technologies. This business model is very similar to the current smartphone industry.

Established auto companies may be looking to the future, seeing the iceberg they’re about to hit, and desperately trying to avoid it. So it focuses on producing electric cars and shows interest in automated driving software.

The main success of these companies was the ability to ‘componentize and standardize’ the smartphone. ‘Componentize and standardize’ means that there is no single manufacturer of telephone components. All components like processor, operating system, camera sensor etc. are bought from different companies and everyone puts them together. As a result, smartphones became like Lego blocks. New companies like Xiaomi were also able to use the same operating system, processor and camera sensor as the giant companies in their phones. They were even able to assemble the phones through contract manufacturing like Foxconn. As a result, they could only focus on designing and selling smartphones. Such componentization has created a level playing field for business.

The auto industry is witnessing a similar revolution. By comparison, the iPhone maker here is Tesla. After the necessary polishing, electrification, automated driving, they imitate Apple’s business model. Like Apple, Tesla has its own manufacturing ecosystem. Like Apple, Tesla makes its own software. They also design their own chips. They are also developing their own automated driving algorithms. Recently they also make their own batteries. They have a network of Tesla fast chargers spread across several cities. Work is also underway on a self-contained system to allow Tesla cars to drive underground. That is, like Apple, they manage their own offerings, distributors and components.

Tesla has individually identified each component of this new form factor while creating consumer demand for them. Tesla has become the most valuable car company in the world in just a few years. On the other hand, other companies in the industry are competing with them. The rest of the industry has an idea of ​​what the future industry will look like and they want to emulate this model. That is, car companies are having their Android moment.

A few weeks ago, Nvidia announced their next generation of chips for cars called Oren and Atlan. They also announced a reference kit called Hyperion, which includes all the necessary sensors and software. This allows car manufacturers to combine artificial intelligence and automated driving. A few months ago, LG and contract manufacturer Magna announced that they would be working on an electric powertrain with a motor inverter and a built-in charger. These can be easily integrated into their vehicles by car manufacturers. It was rumored that Apple Cars would be their first customer. But to the surprise of everyone in the industry, Volkswagen has obtained their first Meb Electric platform license. This includes the motor, battery and drivetrain. Ford has already announced plans to build cars with it.

There are startups like AI Motive that are developing automated driving for customers. Contract manufacturer Foxconn enters car assembly. Again, many companies are also building charging networks together to compete with Tesla’s Supercharger.

‘Componentizing and standardizing’ has resulted in a large operating system for computers and smartphones. The same is going to happen in the case of cars. Many companies, including Sony and Huawei, are slowly moving away from creating cluttered and unnecessary custom user interfaces on car screens. New companies like Polstar have announced that they will service cars with Google’s software. Once new manufacturers can use the same engines, batteries, self-driving cars, etc. in their cars as the big companies, the industry will become a level playing field.
The mindset of the consumer will also gradually change. Branding and advertising practices employed by companies such as Mercedes and Audi for decades will gradually decline. When new companies use the same components, buyers will know that it is not reasonable to buy cars of these brands at a higher price than others. Sony is building a new car called ‘Vision S’ using such a component model. Recently, the setter has also started road testing.
Following the ideas of Henry Ford, the car has become an important mode of transport today. From the 1920s through the 1950s and 1960s, the automotive industry’s key innovations were speed and passenger comfort.

Tesla’s innovation has taught everyone to rethink right now. Perhaps this is the first fundamental change in this industry since the invention of the automobile. There has never been a situation like this for car companies to chase the new. If this change is not spotted, if the new business model is not adopted accordingly, stumbling is inevitable. No company wants to go down in history as a second Nokia.

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